UK consumer confidence edges up as budget gloom fades
UK CONSUMER confidence posted a surprise increase in November after the budget ended uncertainty over the tax and spending plans of the new Labour government, a survey found.
Research firm GfK said its key sentiment gauge rose three points to minus 18 as households became more optimistic about both their personal finances and the broader economic outlook. Economists surveyed by Bloomberg expected a small fall.
“There was evidence of nervousness in recent months as consumers contemplated the potentially worrying impact of the UK budget at home, and even the implications of the US presidential election,” said Neil Bellamy, consumer insights director at GfK. “But we have moved past those events now.”
GfK’s major purchases index jumped five percentage points to minus 16, indicating households are planning to take advantage of Black Friday discounts on big-ticket items at the end of the month. Other gauges, covering personal finance expectations and the wider economy, registered smaller increases.
However, overall confidence remains below levels seen in August, before Prime Minister Keir Starmer warned of “painful” decisions to fix the public finances and a tough road ahead for the economy. It suggests households are still lacking a clear feel-good factor.
Official figures due at 7 am in London are expected to show retail sales fell 0.3 per cent last month, in a further sign of consumer wariness before the Oct 30 budget.
Businesses bore the brunt of the £40 billion (S$67.8 billion) of tax increases announced in the budget as Chancellor Rachel Reeves raised payroll levies for employers to help fund capital investment and repair public services. Economists fear, though, that firms will respond by cutting jobs, limiting pay rises and increasing prices for consumers.
The Bank of England is expected to provide little relief, with policymakers signalling they are in no rush to cut the cost of borrowing amid lingering inflation risks.
“While 2025 is just around the corner and the New Year often brings optimism, it’s too early to expect significant further improvements in the consumer mood,” Bellamy said. “As recent data shows, inflation has yet to be tamed, people are still feeling acute cost-of-living pressures, and it will take time for the UK’s new government to deliver on its promise of change.” BLOOMBERG
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